Auto industry goes into overdrive

Mayank Bhardwag & Santanu Choudhury in New Delhi

The domestic auto industry went into overdrive in 2002 with substantial gains in segments like cars, commercial vehicles and two-wheelers.

Notwithstanding slipping scooter sales, two-wheelers rode northwards on the back of a booming motorcycle market, which accounted for about 75 per cent of the total two-wheeler market, as motorcycles powered on with trendy and fuel-efficient models.

Enamoured by the popularity of motorcycles, new entrants like Kinetic and LML forayed into the high volume commuter segment, which started paying rich dividends to them.

Commercial vehicles, one of the important yardsticks to gauge the economic situation, finally revved up as leading commercial vehicle makers like Tata Engineering and Ashok Leyland witnessed a surge in sales.

The slight growth, which started in the medium and heavy truck segment, during the later part of 2001, finally culminated in a major upswing in the overall industry sales.

Last year's growth was dubbed as a slight resurgence in the economy, which went full hog during 2002, as M&H trucks are used mainly in infrastructure works like steel, cement and transportation.

The growth in the commercial vehicle segment assumes significance as large parts of the country was plagued with deficient monsoon this year, which affected agricultural production and rural incomes. Truck sales got a massive boost due to a spurt in infrstructural activities, fleet replacement by truck owners and satisfactory progress in the National Highway Development Programme.

The trend set by Tata Engineering and Ashok Leyland was followed by Eicher Motors, Swaraj Mazda, and Mahindra and Mahindra in the light commercial vehicle segment. The feel good factor in the segment was palpable, as the industry has been predicted to grow at the rate of 7-10 per cent during this fiscal against a dip of three per cent last year.

Leading commercial vehicle makers said the uphill drive was backed by strong economic fundamentals and not merely a business cycle. The segment witnessed growth in spite of substantial increase in diesel price during the past two-three years.

Buoyed by the booming market the Hinduja group flagship Ashok Leyland and Tata Engineering came out with new and heavier models incorporating improved features like power steering and air suspension to ward off competition from Swedish major Volvo and Czech company Tatra.

Apart from manufacturing, Ashok Leyland also forayed into non-manufacturing areas like fleet management and providing finance to its customers for purchasing vehicles or fuels.

Encouraged by good sale of the medium and heavy trucks, Eicher forayed into this segment in 2002.

The coming year is likely to witness intense competition in the commercial vehicle segment as more progress is made on the NHDP and industrial activity increases.

Improved business confidence, export growth and better tax collection were likely to sustain the momentum.

The year witnessed a high rise in motorcycle sales and a stiff competition between Bajaj Auto and TVS Motor for the slot of number two-motorcycle maker of the country. With the beginning of 2002, 110cc motorcycle of TVS, 'Victor', gave a good deal of competition to Bajaj's relatively cheaper motorcycle 'Boxer' and 110cc 'Caliber'. The pick-up in the sales of 'Victor' proved to be a boon for TVS and gave sleepless nights to Bajaj.

Others like Yamaha and Royal Enfield Motors set the stage for high-powered motorcycles. The local subsidiary of Japanese major Yamaha took the market by storm with its 125cc cruiser motorcycle 'Eliminator' while the Eicher group company Royal Enfield's four stroke 350cc motorcycle 'Thunderbird' set the road on fire. Pune-based Kinetic also announced the launch of cruiser motorcycle 'Acquila'.

Traditional scooter makers like LML and Kinetic forayed into mass commuter motorcycle category with 110cc motorcycle 'Freedom' and 'Boss'. Next year, LML is likely to offer high-end motorcycles with technology from Daelim while Kinetic is expected to roll out a 150cc motorcycle in the 'GF' series in technical alliance with South Korea's Hyosung.

2002: The Year That Was